The technological and Internet revolutions have disrupted many business models over the past twenty years and have been a boon to consumers and investors alike. Within hours of clicking a mouse, millions of products can be delivered to a consumer’s door steps by companies like
Amazon.com and
eBay, but increasingly by companies like
Under Armour,
Nike or
Apple.

Companies like Uber and Lyft have disrupted the traditional taxi business model. Others companies like Airbnb have changed the marketplace for consumers of the traditional hotel room. And large tech companies like
Microsoft,
Google,
Facebook,
Apple,
Salesforce.com and Dropbox have changed not only the way we work, but increasingly where we work. Astute investors who identify the beneficiaries of these disruptive technologies stand to reap the rewards in the stock market.

The online marketplace has flourished in large part because government regulation of the Internet has been generally kept at bay. However, for some industries, underlying regulations have provided legacy companies a powerful tool to thwart consumer demand and maintain at least portions of their monopolistic glory days.

This is most evident in the optometric industry where for decades prescribers enjoyed a collusive relationship with manufacturers and a blatant conflict of interest with consumers. First it was eyeglasses. Prescribers held exclusive legal right to dictate where consumers purchased their glasses. They did this by refusing to release to patients the prescription necessary to buy glasses. Beyond simply making a guaranteed sale, the prescribers’ financial pots were further sweetened by pricing agreements with manufacturers that drove their costs down and the costs for consumers up.

It was the type of economic model that is only possible when consumers are being held hostage. Then in 1978, the Federal Trade Commission stepped in and ruled consumers had the right to shop around and mandated the automatic release of prescriptions. Freed from their bondage, consumers demanded choices and the market complied with stores such as Lenscrafters, a division of
Luxottica Group.

Medical assistant Astrid Garcia performs an eye exam on a patient at a Community Clinic Inc. health center in Takoma Park, Maryland, U.S., on Wednesday, April 8, 2015.(Andrew Harrer/Bloomberg)

The process repeated itself with the invention of contact lenses. The FTC ruling only specifically addressed glasses so again, optometrists held prescriptions and users captive. That is until Congress intervened in 2004 passing the Fairness to Contact Lens Consumers Act which required the release of prescriptions for contacts just as is required for glasses.

Of course, the prescribers and manufacturers fought that legislation tooth and nail. Arguing primarily on the issue of safety, they pulled out every gratuitously scary scenario imaginable. Congress rightfully didn’t buy it and passed the law. Even in Japan and the European Union where far more liberal polices require no prescription at all to buy eyewear there is no evidence that giving consumers choices is unsafe. So, with consumers once again free to shop around a variety of retailers, many of which are online, retailers stepped in to meet market demand and offer consumers more convenient and affordable options.

Nevertheless, prescribers and manufacturers have continued to try to henpeck consumers, even seemingly violating federal law to do so. Tens of thousands of complaints of prescribers refusing the release prescriptions have been filed in states all across the nation. Dozens of state Attorneys General have successfully filed suits forcing manufacturers and prescribers to pay hundreds of millions of dollars in fines for price rigging schemes. Some optometrists have taken a slyer approach to recapturing consumers by releasing the prescription but refusing to communicate with retailers trying to fill patients’ needs.

The FTC recently began an examination of contact lens rules as it pertains to the Fairness to Contact Lens Consumers Act (FCLCA). However, after briefly receiving public comments, no further action has been taken. It is time for the FTC to act. They clearly have the power to do so and there are clearly problems with the current system.

Reigning in the price fixing and systemic flouting of federal law by prescribers and manufacturers will enable investors to truly evaluate the investing merits in and around this space bring stability to an industry that should already have it.